I.T. MIRROR 23-24 VOL 5

Income Tax Bar Association Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org Vol. 5 October

Glimpses of Webinar held on 16/09/2023 on the topic of Dissecting and Demystifying Form No. 10B, 10BB & ITR-7

5 Real Estate-works Contract and Complexicity in GST – Adv. BHARAT L. SHETH New Form GST DRC-01B, DRC-01C & DRC-01D – Weapon for Officers and Headache for Dealers – Adv. DARSHIT SHAH Section 194-Q : Applicability to the transactions of purchase of business on “Slump Sale Basis” – CA MITISH S. MODI Navigating Penalties and Interest: Exploring Limits and Authority in the Mahindra & Mahindra Case – CA YASH SHAH Monthly Payment of Bonus and Leave : Legality, Justification and Risks – PRAMOD KUMAR JADIA Incentives available in Gujarat for IT / ITeS Service Sector – CS MUKESH PAMNANI Understanding RERA through Questions and Answers – Adv (CS) LOKESH SHAH & CA HARSH MEHTA What are Outsourcing & Offshoring Services in India – CA FARHAD G. WADIA 33 2 Chairman's Message 3 President's Message 4 Hon. Secretary's Message - CA (Dr.) Vishves Shah - CA Ashish Tekwani - CA Jaykishan Pamnani 1 Adv. Ashutosh R. Thakkar Adv. (Dr.) Dhruven V. Shah Adv. (Dr.) Kartikey B. Shah Dhruvin D. Mehta (IPP) Bhavesh K. Govani Hiren C. Thakkar CA Kenan M. Satyawadi Narendra D. Karkar CA Parth H. Doshi Parth K. Katharia CA Pratik P. Kaneria CA Suvrat S. Shah Adv Dhiresh T Shah President Emeritus CA Ashish T. Tekwani President CA Shridhar K. Shah Vice President CA Jaykishan P. Pamnani Hon. Secretary CA Maulik B. Patel Hon. Joint Secretary CA Shivam K. Bhavsar Hon. Treasurer CA (Dr.) Vishves Shah Chairman CA Nisha Tekwani CA Suvrat Shah CA Rajesh Mewada Co – Chairman Jinal Shah CA Kaivan Parekh CA Pratik P. Kaneria Members Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org Mouth Piece of Income Tax Bar Association INVITEE MEMBERS COMMITTEE MEMBERS IT MIRROR COMMITTEE OFFICE BEARERS Vol. 5 - October CONTENTS 29 23 21 17 15 11

Chairman’s Message CA (Dr.) VISHVES SHAH Chairman 2 Dear Members of the Income Tax Bar Association, I am glad to connect with you through the pages of IT Mirror, our trusted source of tax wisdom. Today, I would like to talk about what makes our community of tax professionals so unique and why our journey is unlike any other. Firstly, it's heartening to see how we, as tax professionals, always have each other's backs. In a world where competition can be fierce, we stand out as a group that genuinely helps and supports one another. We understand that tax matters can be complex and that teamwork can often lead to the best solutions. This spirit of cooperation is one of our strengths. Our hunger for knowledge sets us apart too. Tax laws are like a moving target, always changing. To keep up, we have to be avid learners. IT Mirror itself reflects our desire for knowledge, and it is not just about what is printed on its pages. It is a symbol of our thirst for understanding. In our field, unlike some others, the rules are always shifting. What used to work might not work today. We need to be quick learners, always ready for change. This adaptability is both a challenge and an opportunity. It means we have to keep learning and stay strong. As we wrap up another taxing tax season, it is a good time to learn from our mistakes. We are not perfect, and we do face hurdles. But our strength lies in our ability to bounce back from our errors. There is a saying: "Mistakes are how we learn." Each slip-up is a chance to do better next time. Let us take these lessons to heart and use them to improve our service in the coming year. In conclusion, I want to thank each of you for your dedication and hard work. Together, we are a force to be reckoned with, always pushing the boundaries of tax knowledge. IT Mirror will continue to be our guide, providing insights and inspiration. Let us keep supporting one another, seeking knowledge, and embracing the changes that come our way. Together, we will not only navigate the tax landscape but also shape its future. Thank you for your unwavering support and commitment to the Income Tax Bar Association and IT Mirror. Warm regards, CA (Dr.) Vishves A. Shah Chairman - IT Mirror

3 Dear Members I am deeply honored and delighted to communicate with you through the pages of IT Mirror, our cherished publication and a valuable source of information and insight. IT Mirror serves as our beacon, illuminating the path through the labyrinth of Income Tax, GST, and other pertinent laws that intricately shape our profession and significantly influence the world of businesses. September, without a doubt, has been an arduous and demanding month for each one of us. It is a month where we invest our intellectual prowess, time, and dedication into serving our clients, deciphering the complexities of taxation, and ensuring strict compliance. It is a month of burning the midnight oil, an exercise in professional diligence where we strive to provide the most accurate and beneficial advice to our clients. It is a month that truly tests our mettle. However, as we transit into the festive season, it is essential that we pause to recognize the profound significance of celebrating festivals. Festivals are not mere intervals of jubilation; they are essential pauses in the relentless rhythm of our lives. They are moments of reflection, reconnection, and revitalization. Festivals grant us the much-needed respite from the relentless toil of our professional lives, reminding us of the profound importance of balance. As you navigate through the pages of IT Mirror, I urge you to not only absorb the valuable insights shared within but also to pause and appreciate the bonds that we share with our colleagues, our clients, and our loved ones. Festivals provide the perfect backdrop for strengthening these bonds, for they are moments of shared joy and celebration. As the festive season unfolds, with the radiant lights of Diwali, the symbolic triumph of good over evil in Dussehra, and the vibrant festivities of Navratri, let us collectively embrace the joy and prosperity these celebrations bring. May these moments of festivity not only bring happiness to our lives but also serve as a reminder of the importance of balance and rejuvenation in our professional journeys. In closing, I extend my heartfelt wishes for a joyful and prosperous festive season to each and every one of you. May the warmth and togetherness of these festivals energize your spirits and kindle new enthusiasm in your professional endeavors. Together, as members of the Income Tax Bar Association, let us continue to illuminate the path of knowledge and excellence in the field of taxation. I want to express my deepest gratitude for your unwavering support for IT Mirror and the Income Tax Bar Association. It is through your collective efforts and commitment that we continue to thrive and excel. Warm regards, CA Ashish Tekwani President Income Tax Bar Association President’s Message CA ASHISH TEKWANI President

Dear Members, I hope this message finds you all in good health and high spirits. It is with immense pleasure that I write to you today, as we prepare to embark on the journey of our 5th edition of IT Mirror. This milestone is a testament to the dedication and passion that each one of you has poured into this publication. We are thrilled to bring you another captivating issue filled with valuable articles and engaging content. In today's fast-paced world, where information is abundant and constantly evolving, we understand the importance of curating content that not only informs but also ignites your curiosity and fuels your passion. Our dedicated team of experts has worked tirelessly to create a magazine that offers a valuable content and information and provides us knowledge from different industry.This issue dives deep into a diverse array of topics, from the latest trends in Income Tax and other allied laws. I know every member had a hectic schedule during September month for audit work. Hope everyone is relieved from heavy work load now and getting ready yourself for enjoying Garba in this month. May the nine long days of Navratri fill your home and heart with positivity, good thoughts, and happiness. As we all know, G20 Summit was successfully held in New Delhi, India on September 9-10, 2023 under the Presidency of India. It was indeed a proud moment for all of us. The world media has hailed India's successful organization of the G-20 Summit, describing its outcome as a diplomatic victory. As we embark on the journey toward our 5th edition, let us continue to uphold the values and standards that have made IT Mirror magazine a cherished publication. Your hard work, creativity, and dedication are what make each edition special. I thank you for being an essential part of our magazine's success. Let's make this 5th edition and all forthcoming editions a true celebration of our journey together. Your feedback and support continue to drive our commitment to excellence, and we're always eager to hear your thoughts and suggestions. I hope you enjoy this issue as much as we've enjoyed bringing it to you. Together, let's embrace the power of knowledge, inspiration, and connection that magazines like ours can offer. Happy reading!!! Warm Regards. Yours Sincerely, CA Jaykishan Pamnani Hon. Secretary Income Tax Bar Association CA JAYKISHAN PAMNANI Hon. Secretary Hon. Secretary’s Message 4

PREAMBLE What is real estate in simple words? Real estate is the property, land, buildings, air rights above the land and underground rights below the land. The term real estate means real, or physical, property. “Real” comes from the Latin root res, or things. There are four types of real estate: Residential real estate: These include both new construction and resale homes. ... Commercial real estate: These include shopping centers and strip malls, medical and educational buildings, hotels and offices. Industrial real estate Land SCENARIO BEFORE GST IMPLEMENTATION The Hon'ble Apex Court in the case of Gannon Dunkerly, had held that in case of a works contract, the dominant intention of the contract is the execution of works, which is a service and there is no element of sale of goods (as per Sale of Goods Act). The contract being one indivisible contract, it cannot be broken up to levy VAT on sale of goods involved in the execution of works contract. This decision led the Government to amend the Constitution of India and insert Article 366(29A) (b) which enabled the State Governments to levy tax (VAT) on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contracts. A tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract is deemed sale of goods under Article 366(29A) of Constitution of India.[As inserted by 46th Amendment to Constitution in 1982]. Thus, the Constitution states that 'works contract' is deemed sale of goods, while GST Law states that it is 'supply of service’ Clause 44 of section 65B of Finance Act, 1994, defines the work contract. “works contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property. By virtue of Section 66E of Finance Act, 1994, the service portion involved in the execution of works contract was a declared service. Hence Service Tax could be levied only on the service element of the works contract. The Real Estate-works Contract and Complexicity in GST – ADV BHARAT L.SHETH Tax Advocate 5

I. T. MIRROR (2023-24) principles of segregation of the value of goods were provided in Rule 2A of the Service Tax (Determination of Value) Rules, 2006. Works contract was not defined in The Gujarat value Added Tax Act, 2003. Section 2(ja) of The Central Sales Tax Act, 1956 define works contract as under; “works contract” means a contract for carrying out any work which includes assembling, construction, building, altering, manufacturing, processing, fabricating, erection, installation, fitting out, improvement, repair or commissioning of any movable or immovable property. This definition was added w.e.f. 13-05-2005. POSITION UNDER GST LAW Under GST laws, the definition of “Works Contract” has been restricted to any work undertaken for an “Immovable Property” unlike the existing VAT and Service Tax provisions where works contracts for movable properties were also considered. Section 2(119) of The Central Goods and Services tax Act, 2017 defines works contract as under; Section 2(119) “ works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Section 2(30) of The Central Goods and Services tax Act, 2017 defines Composite Supply as under; Section 2(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration: where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. TAX LIABILITY ON COMPOSITE SUPPLIES As per section 8(a) of The Central Goods and Services Tax Act, 2017, The tax liability on a composite supply or a mixed supply shall be determined in the following manner, namely- (a) a composite supply comprising two or more supply, one of which is principal supply, shall be treated as a supply of such principal supply: and (b) --- As per Para 6 (a) of Schedule II to The Central Goods and Services Tax Act, 2017, works contracts as defined in section 2(119) of The Central Goods and Services Tax Act, 2017, shall be treated as a supply of services. Thus, there is a clear demarcation of a works contract as a supply of service under GST. Para 6 (a) of Schedule II (ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICE) to The Central Goods and Services Tax Act, 2017, is as under; 6. Composite supply The following composite supplies shall be treated as a supply of service, namely, (a) Works contract as defined in clause (119) of section 2; and 6

I. T. MIRROR (2023-24) (b) ------ Para 5 (b) of Schedule II (ACTIVITIES OR TRANSACTION TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICE) to the CGST Act, 2017 is as under; 5. Composite supply The following shall be treated as a supply of service, namely, (a) (b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation; For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely – (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority. (2) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure. RELEVENT SECTIONS 1. Section 7 (SUPPLY) (1) For the purposes of this Act, the expression “supply” includes- (a) all forms of supply of goods or services or both such as Sale, Transfer, Barter, Exchange, License, Rental, Lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transaction, by a person, other than individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation: For the purpose of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one person to another; (b) Importation of service, for a consideration whether or not in the course or furtherance of business, and (c) The activities specified in schedule I, made or agreed to be made without consideration, (d) OMITTED As per Para 5 (b) of Schedule II of CGST Act, 2017- Construction Activity is being described as“Service”, hence all the provisions of Place of Supply & Time of Supply relevant to “Services” shall apply to Construction Activity 7

As per Para 6 (a) of Schedule II of CGST Act, 2017– Works contract as defined in clause (119) of section 2 is being described as “Service”, hence all the provisions of Place of Supply & Time of Supply relevant to “Services” shall apply to works contract. 2. Time of Supply of Services As per section 13 of The Central Goods and Service Tax Act, 2017, Liability to pay GST on Supply of Services shall arise at the earliest of the following dates: date of issue of invoice by the supplier, if invoice is issued within the period prescribed under sub-section(2) of section 31 ( See rule 47 of CGST Rules 2017-within a period of thirty days from the date of the supply of service) or the date of receipt of payment. date of provision of service if invoice is not issued within the period prescribed under sub-section(2) of section 31 or the date of receipt of payment or date on which recipient shows the receipt of service in Books of Account, in a case where the provision of clause (a) or (b) of sub-section (2) of section 13 do not apply. In case of Continuous Supply of Services, Time of Supply shall be... the due date ascertainable from Contract or the date on which the supplier receives the payment with respect to the supply. 3. Place of supply of services where location of supplier and recipient is in India. As per section 12 of The Integrated Goods and Service Tax Act, 2017, 12. (1) The provisions of this section shall apply to determine the place of supply of services where the location of supplier of services and the location of the recipient of services is in India. (2) The place of supply of services, except the services specified in sub-sections(3) to (14),— (a) made to a registered person shall be the location of such person; (b) made to any person other than a registered person shall be,— (i) the location of the recipient where the address on record exists; and (ii) the location of the supplier of services in other cases. Location of supplier Place of supply Intra-State or inter-State Tax applicable Gujarat Gujarat Intra-State CGST+SGST Gujarat Maharashtra Inter-State IGST (3) The place of supply of services,— (a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or (b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or (c) by way of accommodation in any immovable property for organizing any marriage or reception or matters I. T. MIRROR (2023-24) 8

I. T. MIRROR (2023-24) related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or (d) any services ancillary to the services referred to in clauses (a), (b) and (c), shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located: Provided that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient. Explanation.—Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. 4. Place of Supply – Exception for Immovable Properties In case of Immovable Properties, the Place of Supply shall be deemed to the “Location of Immovable Property” Few Illustrations: Location of Recipient of service Immovable property Place of provision service provider Location of service (Tax applicable) Gujarat Maharashtra Gujarat Gujarat (CGST+SGST) Gujarat Maharashtra Rajasthan Rajasthan(IGST) Gujarat China Gujarat Gujarat (CGST+SGST) Gujarat China China China (Export of Service) 5. Valuation – Sec. 15 the Central Goods and Services Tax Rules, 2017 Transaction value is the price actually paid or payable for the said supply of goods or services between unrelated parties and price is the sole consideration. Transaction value includes... Taxes other than GST Expenses incurred by recipient in relation to supply Incidental expenses charged at the time or before the supply commission, packing or amount charged for anything done by the Supplier, Interest, late fee or penalty for late payment of consideration. 6. Maintenance of records As per Rule 56 (13) of the Central Goods and Services Tax Rules, 2017, Every registered person supplying services shall maintain the accounts showing quantitative details of goods used in the provisions of services, details of input services utilized and the services supplied. 9

I. T. MIRROR (2023-24) As per Rule 56 (14) of the Central Goods and Services Tax Rules, 2017, Every registered person executing works contract shall keep separate accounts for works contract showing – (a) the names and addresses of the persons on whose behalf the works contract is executed; (b) description, value and quantity (wherever applicable) of goods or services received for the execution of works contract; (c) description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract; (d) the details of payment received in respect of each works contract; and (e) the names and addresses of suppliers from whom he received goods or services. CONCLUSION The taxation of real estate-works contract is very complex. Detailed study of the provisions of valuation of supply, time of supply, place of supply is required for determination of GST liability. SPARK A lawyer is a person who writes ten thousand words documents and calls it a “brief”. 10

I. T. MIRROR (2023-24) In a recent update, the Goods and Services Tax Network (GSTN) has introduced a new functionality to enable taxpayers to explain the difference in liability between their GSTR-1 and GSTR-3B returns online & ITC available in Auto Generated form GSTR 2B vs ITC availed in GSTR 3B Returns. This development comes as a directive from the GST Council and aims to streamline compliance procedures for taxpayers and curb the revenue leakages. For Better understanding we will go through below table. Rule Details Form Rule 88C Manner of dealing with difference in liability reported DRC 01B in statement of outward supplies and that reported in return. [i.e : Liability declared in GSTR 1 Vs Liability declared GSTR 3B] Rule 88D Manner of dealing with difference in input tax credit available DRC 01C in auto generated statement containing the details of input tax credit and that availed in return. [i.e : ITC available in GSTR- 2B Vs ITC availed GSTR-3B] RULE 88C: The 48th Council Meeting commenced with a discussion of the recommendation put forth by the Law Committee. After extensive deliberation, the Committee suggested the inclusion of a novel Rule 88C in the CGST Rules of 2017. This rule aims to notify taxpayers via the portal about the disparity between their tax liabilities in FORM of GSTR-1 and FORM GSTR-3B for a given tax period, especially if the former exceeds the latter by a significant margin. 88C: Manner of dealing with difference in liability reported in statement of outward supplies and that reported in return. (1) Where the tax payable by a registered person, in accordance with the statement of outward supplies furnished by him in FORM GSTR-1 or using the Invoice Furnishing Facility in respect of a tax period, exceeds the amount of tax payable by such person in accordance with the return for that period furnished by him in FORM GSTR-3B, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference in Part A of FORM GST DRC-01B, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to. The above rule was officially introduced through Notification No. 26/2022 – Central Tax, issued on the 26th of December 2022. On GST portal Part A of Form DRC-01B will be issued if the tax payable indicated in GSTR-1 surpasses that in GSTR-3B. (Not every time, but if exceeds a certain specified percentage) New Form GST DRC-01B, DRC-01C & DRC-01D – Weapon for Officers and Headache for Dealers - ADV DARSHIT SHAH 11

I. T. MIRROR (2023-24) The taxpayer is then required to do either remit the differential tax liability, along with interest as per section 50, via FORM GST DRC-03 or Pay the variance in tax payable on the common portal within a span of 7 days. Interestingly, in the scenario that no response is given within the time period specified, the authorities may proceed to recover the unpaid balance in accordance with the provisions of Section 79. Moreover, the Law Committee proposed the addition of a new clause (d) in sub-rule (6) of Rule 59 within the CGST Rules of 2017. By This clause Law Committee recommended enable the blocking of GSTR-1 for a subsequent tax period unless the taxpayer has deposited the amount specified in the intimation or has furnished a reply explaining the reasons for any amount remaining unpaid as required under the provisions of sub-rule (2) of rule 88C. It is necessary to submit a DRC-01B reply; otherwise, GSTR-1 will be blocked for the following filing period and will only be unblocked after a DRC-01B reply has been submitted. To file the Form DRC-01B Part B, please follow the steps below Access the GST portal by visiting www.gst.gov.in. The GST home page will be displayed. Login to the GST Portal using your valid credentials. Navigate to Services > Returns > Return Compliance option. Alternatively, you can directly click on the Return Compliance link available on the dashboard. RULE 88D: The government frequently makes changes to the Input Tax Credit under the GST Act. As per section 16 and rule 36(4) the traders are not entitled to claim more input tax credit than what appears in GSTR-2B.There have been numerous cases in recent months where more credit has been claimed in GSTR-3B than is actually available in GSTR-2B. The concern over these discrepancies prompted the creation of Rule-88D and Form DRC-01C in 50th Meeting of GST Council held on 11th July 2023, based on the Council’s recommendation CBIC has implemented a significant change through Notification No.38/2023-Central Tax, Dated 4th August, 2023. This change pertains to the inspection of Rule 88D after Rule 88C. 88D: Manner of dealing with difference in input tax credit available in auto generated statement containing the details of input tax credit and that availed in return. (1) Where the amount of input tax credit availed by a registered person in the return for a tax period or periods furnished by him in FORM GSTR-3B exceeds the input tax credit available to such person in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B in respect of the said tax period or periods, as the case may be, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference in Part A of FORM GST DRC-01C, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to— According to Rule 88D of the CGST Rules,2017, the GSTN Portal will now compare the Input Tax Credit available in Form GSTR-2B with the Input Tax Credit availed in Form GSTR-3B. If a taxpayer claims excess Input Tax Credit in Form GSTR-3B compared to the Input Tax Credit available in Form GSTR-2B, exceeding the prescribed amount and percentage as recommended by the Council, the taxpayer will receive an intimation in Part A of Form GST DRC-01C for the variation through the GSTN Portal. The taxpayer has two options to address the variance in ITC available in Form GSTR-2B and ITC availed in Form GSTR-3B. 12

I. T. MIRROR (2023-24) Alternative 1: If the taxpayer checks their books of accounts and other supporting documentation and discovers a discrepancy between ITC available in Form GSTR-2B and ITC availed in Form GSTR-3B, must pay excess input tax credit which claimed by filing DRC-03 and pay interest in accordance with Section 50. Alternative 2: If the taxpayer is confident in the accuracy of their records and documentary evidence and has carefully reviewed their books of accounts and GSTR returns for the relevant tax periods (Form GSTR-3B vs. Form GSTR-2B), they are able to provide a reasonable explanation along with the supporting documentation in Part – B of Form DRC 01C Via the GSTN Portal within 7 Days from the Date of receiving the intimation. RULE 59(6)(e) In addition the Law Committee proposed the addition of a new clause (e) in sub-rule (6) of Rule 59 within the CGST Rules of 2017. Clause (e) : a registered person, to whom an intimation has been issued on the common portal under the provisions of sub-rule (1) of rule 88D in respect of a tax period or periods, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility for a subsequent tax period, unless he has either paid the amount equal to the excess input tax credit as specified in the said intimation or has furnished a reply explaining the reasons in respect of the amount of excess input tax credit that still remains to be paid, as required under the provisions of sub-rule (2) of rule 88D; Moreover, the GST Council in its 50th meeting has recommended to insert Rule 142B in the CGST Rules to provide the manner of recovery of the tax and interest in respect of the amount intimated under rule 88C of the CGST Rules which has not been paid and for which no satisfactory explanation has been furnished by the registered person. In order to align with recommendations of the 50th GST Council’s Meeting the CBIC vide Notification No. 38/2023 – (Central Tax) dated August 04, 2022 has issued the Central Goods and Services Tax (Second Amendment) Rules, 2023 to further amend the Central Goods and Services Tax, Rules, 2017. Rule 142b: intimation of certain amounts liable to be recovered under section 79 of the act. (1) Where, in accordance with section 75 read with rule 88C, or otherwise, any amount of tax or interest has become recoverable under section 79 and the same has remained unpaid, the proper officer shall intimate, electronically on the common portal, the details of the said amount in FORM GST DRC-01D, directing the person in default to pay the said amount, along with applicable interest, or, as the case may the amount of interest, within seven days of the date of the said intimation and the said amount shall be posted in Part-II of Electronic Liability Register in FORM GST PMT-01. (2) The intimation referred to in sub-rule (1) shall be treated as the notice for recovery. (3) Where any amount of tax or interest specified in the intimation referred to in subrule (1) remains unpaid on the expiry of the period specified in the said intimation, the proper officer shall proceed to recover the amount that remains unpaid in accordance with the provisions of rule 143 or rule 144 or rule 145 or rule 146 or rule 147 or rule 155 or rule 156 or rule 157 or rule 160.”. If the taxpayer failed to pay difference of Input Tax Credit between Form GSTR-2B vs. Form GSTR-3B, the jurisdictional officer has issued an intimation for amount recoverable under Section79 of the CGST Act,2017. 13

I. T. MIRROR (2023-24) The Form DRC 01C is not currently available on the GST Portal, but it will be there eventually. The Part A is system generated and tax payers has to submit reply in Part B of the form. To file the Form DRC-01C Part B, you may follow the below steps. Access the GST portal by visiting www.gst.gov.in. The GST home page will be displayed. Login to the GST Portal using your valid credentials. Navigate to Services > Returns > Return Compliance option. Alternatively, you can directly click on the Return Compliance link available on the dashboard. Thus if the difference between the liability of GSTR 1 vs the liability shown in GSTR 3B is greater than the prescribed percentage, then the traders will receive an intimation in DRC 01B under Rule 88C and the input tax credit available in GSTR 2B vs the input tax credit availed in GSTR 3B is more than the prescribed percentage then, an intimation will be given to the traders in DRC 01C under RULE 88D for which reply has to be submitted in PART B within a period of seven days. The new rule implemented by the government will be a weapon for the GST officers and another headache for the traders. 14

I. T. MIRROR (2023-24) INTRODUCTION: The Finance Act, 2021 has inserted the provisions of Section 194-Q of the Act w.e.f. 01–07–2021, which provides for the deduction of tax at source on payment of certain sum by the buyer to the resident seller for the purchase of the goods. Simultaneously, Rules 30, 31, 31A, 37BA of IT Rules, 1962 as well Form No. 16A, 24G, 26B, 26Q and 27A are amended. The Explanation below Sub Section (1) to Section 194-Q of the Act defines the term “buyer”. For the purposes of applicability of Section 194-Q of the Act, the “buyer” means a person whose total sale, gross receipts or turnover in the immediately preceding financial year was exceeding Rs. 10 Crores and responsible for paying any sum to the resident seller for purchase of any goods of the value or aggregate of such value exceeding Rs. 50 Lacs in any previous year. Thus, under this section, the buyer is responsible for the deduction of tax at source at the rate of 0.1% (if the seller not having PAN, then TDS rate applicable is 5%) on the amount exceeding to Rs. 50 Lacs in a financial year from the resident seller from whom the buyer has purchased the goods worth more than Rs. 50 Lacs. Since, the provisions of this Section provide for purchase of goods, Section 194-Q applies to purchases of both revenue and capital goods. Subsequently, the CBDT came out with Circular No. 13 of 2021 (F.No. 370142/26/2021-TPL) dtd. 30–06–2021 and Circular No. 20/2021 dtd. 25–11–2021 with a view to provide guidelines and clarifications on certain issues on applicability of Section 194-Q of the Act. ISSUE: The issue is as to whether the transactions of purchase of business undertaking on “slump sale basis” is covered by the provisions of Section 194-Q of the Act and for such transactions of acquiring the business undertaking on “slump sale basis”, the buyer is responsible for TDS beyond the amount of threshold limit of Rs. 50 Lacs or not? DISCUSSION: Obviously, the provisions of Section 194-Q of the Act is applicable on the transactions of payment of certain sum for purchase of goods, but the term “goods” has not been defined under the income tax law and therefore, we have to refer to the definition of “goods” as defined under the “Sale of Goods Act, 1930.” Under the Sale of Goods Act, 1930, “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land, which are agreed to be served before sale or under the contract of sale. The Apex Court has, in UOI Vs. Delhi Cloth and General Mills, (AIR 1963 SC 791, 795) and in South Bihar Sugar Mills Ltd. Vs. UOI (AIR 1968 SC 922, 928) has defined the term “Goods” – “to become goods, an article must be something which can ordinarily come to the market to bought and sold”. In other words, “Goods” means anything which is subject matter of trade or manufacture. Section 194-Q : Applicability to the transactions of purchase of business on “slump sale basis” - CA MITISH S. MODI 15

I. T. MIRROR (2023-24) On close reading of the Section 194-Q of the Act, it would be clear that it applies to purchase of all goods whether capital or revenue account, means there must be purchase of “any goods”. For the transactions of purchase of business on “slump sale basis”, we have to further see and interpret the definition of “slump sale” as provided u/s 2(42C) of the Act, section 2(42C) of the Act has been inserted by the Finance Act, 1999 and further amended by the Finance Act, 2021, which reads as under: “slump sale” means the transfer of one or more undertaking, by any means, for a lump sum consideration without values being assigned to the individual assets and liabilities in such transfer” Accordingly, the transaction of purchase of business undertaking for the lump sum consideration, under the slump sale, such transaction is within the ambit of “transfer” as defined u/s 2(47) of the Act, without assigning individual values to each of the assets and liabilities to be transferred. Meaning thereby, the transfer of business undertaking on slump sale basis is the transaction of saleable value of business property having legal title to possession. Business undertaking under slump sale itself is the property with legal title and thus, falls within the definition of “Goods” as defined under the Sale of Goods Act, 1930 and therefore, the provisions of Section 194-Q of the Act for the transaction acquiring business undertaking on slump sale basis are applicable on the transactions value beyond the threshold limit of Rs. 50 Lacs. In other words, if the transaction of purchase of business undertaking on slump sale basis is for the value or the aggregate value exceeding to Rs. 50 Lacs, the purchaser is responsible for TDS at the rate of 0.1% of the amount exceeding to Rs. 50 Lacs in any financial year and if the resident seller fails to furnish PAN, the TDS would be deducted at the rate of 5% instead of 0.1%. 16

I. T. MIRROR (2023-24) INTRODUCTION The Honorable Supreme Court has ruled on interest leviability on customs duties and their complexities. In a precise judgment, the Supreme Court decided a dispute involving interest and penalties on additional customs duties. This judgment affects enterprises, revenue departments, and taxpayers beyond legal boundaries. In the face of complex import laws, the Supreme Court's denial of a Special Leave Petition (SLP) underlines the importance of legislative requirements in taxes. The court's rejection of a revenue department's request opens the door to re-evaluation, refunds, and maybe a larger discussion on Integrated Goods and Services Tax (IGST) and its levy. This article unravels the case's legal complexities and probable customs repercussions. FACTS & BACKGROUND Background: The petitioner manufactures vehicles in India. Petitioner made four Settlement Commission petitions to settle four cases. Cases: Applications connected to: 1. Import through M/s. UK Omni Design International 2. Import through M/s. Fuji Tech Inc. Japan 3. Miyazu Seisakusho Co. imports. Limited, Japan, Sumitomo Corporation, Japan, and Durr Systems GmbH, Germany 4. Import through M/s. Renault, France. Show cause notice accused the petitioner of not disclosing the entire amount due for imported models. This was alleged to be a misdeclaration to avoid customs. Specific Demands: The first show cause notice sought Rs. 33,16,621/- in differential customs duty. A differential customs duty of Rs. 3,91,69,685/- was claimed in the second show cause notice. A differential customs duty of Rs. 1,41,53,468/- was claimed in the third show cause notice. A differential customs duty of Rs. 4,04,567/- was claimed in the fourth show cause notice. Previous Orders: Respondent no. 2 (The Settlement Commission) determined customs tax responsibility from the first show cause notice in a final order on January 29/31, 2008. Interest at 10% was necessary, while penalties above Rs. 1,00,000 were waived. The second case assessed customs tax, and 10% interest, and waived penalties over Rs. 10,000,000. Immunity from prosecution. The third notice produced a similar ruling with 10% interest and a waived penalty above Rs. 5,00,000. Immunity from prosecution was given. The fourth notice orders customs duty, 10% interest, and protection from penalty and punishment. Initial Writ Petitions: The petitioner filed four writs in this Court against respondent no. 2's (The Settlement Commission) rulings. The writ petitions were dismissed on September 4, 2008. The Court overturned 10% interest and penalty orders on customs tax over basic duty. Respondent No. 2 (The Settlement Commission) was ordered to reexamine the cases. Respondent No. 2 (The Settlement Commission) had a final hearing on November 19, 2008, after the remand. A similar final order was issued on January 5, 2009. This order reaffirmed the writ Navigating Penalties and Interest: Exploring Limits and Authority in the Mahindra & Mahindra Case – CA YASH SHAH 17

I. T. MIRROR (2023-24) petitions' previously disputed decisions and reasoning. The automobile manufacturer petitioned the Settlement Commission to resolve customs tax misdeclaration claims. After writ petitions disputed initial orders, the Court remanded to the Settlement Commission. A new order similar to the first rulings followed the review, prompting the legal challenge. ISSUES & CONCERNS Can interest and penalties be imposed on the demand for Customs Additional Duty, Special Additional Duty (SAD), and surcharge? Cases Referred Union of India v. Asahi India & Safety Glass Ltd. (Para 9) Citation: 2015 (320) E.L.T. 179/[2015] 57 GST 497/58 taxmann.com 237 (SC) The petitioner's point in this case was that while challenging a Settlement Commission order under Article 226, the court should look into whether the Commission's procedure is legal and whether the order conforms to the law. The court's review is not about the decision itself but about the process. Collector v. Orient Fabrics (P.) Ltd. (Para 23, 31, 32) Citation: 2003 (158) E.L.T. 545/2003 taxmann.com 68 (SC) The Supreme Court interpreted Section 3(3) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, similar to Sections 3 and 3A of the Customs Tariff Act, 1975, and Section 90(4) of the Finance Act, 2000. In this instance, the Supreme Court ruled that the Act did not penalize violations or confiscate items. Penalties need legal justification. An amendment eventually contained comparable sanctions, but it didn't apply to the Court case. Jain Brothers v. Union of India (Para 30) Citation: AIR 1970 SC 778 In the Jain Brothers case, the Supreme Court established that penalties are not just a continuation of the process of assessing taxes. Instead, they carry the same weight as an extra tax. It means that penalties aren't simply a consequence of the assessment process, nor are they just a way to enforce tax rules. They are a separate responsibility under the law. The Supreme Court is highlighting that penalties in tax matters aren't just a procedural outcome of tax assessment but carry the weight of an additional financial obligation under the law. Indo Swiss Embroidery Industries Ltd. v. Commissioner (Para 31) Citation: 2017 (356) E.L.T. 226/[2017] 84 taxmann.com 128 (Bom.) The key argument was that the ADE (T&TA) Act did not allow interest or penalties. The court cited and followed the Supreme Court's Orient Fabrics ruling. The Orient Fabrics decision concluded that Section 3 of that Act's extra excise duties couldn't be subject to interest or penalties without express restrictions. The court said tax laws should be severely construed. The court concluded that Section 11AC and Section 11AB of the Central Excise Act did not apply since the ADE (T&TA) Act did not provide for interest and penalties. In plain terms, the court was discussing interest and penalties for excess excise duty. The court ruled that these interest and penalty charges couldn't be enforced because the statute didn't specify them. This case followed an earlier ruling that tax regulations must be properly construed. Thus, the Central Excise Act's penalty and interest sections didn't apply. Khemka & Co. (Agencies) (P.) Ltd. v. State of Maharashtra (Para 22) Citation: [1975] 2 SCC 22 In this case, the issue was whether individuals subject to the Central Sales Tax Act of 1956 could be penalized according to the rules of the State Sales Tax Act. The petitioner argued that since the Central Act doesn't have a 18

I. T. MIRROR (2023-24) provision for imposing penalties for delays or defaults in tax payment, penalizing them under the State Sales Tax Act would be unlawful. The Revenue argued that penalties for defaults in tax payment, as outlined in the State Sales Tax Act, should apply to tax payments and collections under the Central Sales Tax Act. They claimed that this is a natural part of the process. The Supreme Court ruled that penalties are legally mandated and are separate from taxes. They are an additional obligation as set by the law. To establish this obligation, three conditions must be met: I. There must be a section in the law that defines this obligation. II. The law must lay out provisions for assessing the obligation. III. The law must provide means for enforcing these tax-related provisions. The Court concluded that a specific section in the law is required to create the obligation for penalties to be imposed. Commissioner v. Ukai Pradesh Sahakari Khand Udyog Mandli Ltd. (Para 25) Citation: 2011 (271) E.L.T. 32 (Guj.) The Gujarat High Court addressed the Central Excise Act and the Sugar Export Promotion Act, of 1958. The court ruled that late tax payments may only be assessed interest if the tax legislation explicitly allows it. Subsection (4) of Section 7 of the Sugar Export Promotion Act. This section states that the Central Excise Act's regulations and requirements apply to the imposition and collection of excise or any other sum stated in that section, just as they do to sugar duty and other Central Government payments. This is identical to Section 3(6) and Section 3A(4) of the Customs Tariff Act, 1975. In this instance, the court clarified that interest can only be applied to late tax payments if the tax legislation explicitly allows it. The Sugar Export Promotion Act didn't allow interest on late tax payments, the court decided. The court ruled that sub-section (4) of Section 7 of the Act did not allow interest since there was no stated regulation in the Act. According to the court's judgment, late tax payments cannot be charged interest or penalties unless the law allows it. Interest could not be levied since the legislation was unclear. This emphasizes the need for clear legal regulations for late tax payments. Union of India v. Valecha Engineering Ltd. (Para 31) Citation: 2010 (249) E.L.T. 167 (Bom.) Valecha Engineering case addressed charging interest on extra customs tax under Section 3 and special additional duty under Section 3A of the Customs Tariff Act. The court stated that interest and penalties can only be assessed if the law allows it. In paragraph 30 of the case, the court stated that interest rules are tools that assist the process run smoothly. In plain terms, the court accepted that interest regulations are more about correcting mistakes than charging or penalizing. Hyderabad Industries Ltd. v. Union of India (Para 36) Citation: 1999 (108) E.L.T. 321 (SC) In Hyderabad Industries Ltd. v. Union of India, the Supreme Court examined Section 12 of the 1962 Customs Act and Section 3 of the 1975 Customs Tariff Act. The question was concerning import customs duty. Section 12 of the Customs Act discusses Indian import duties. It references 1975 Customs Tariff Act rates. Section 12 of the Customs Act simply references the Customs Tariff Act's customs duty rates. An extra levy called Countervailing levy (CVD) under Section 3 of the Customs Tariff Act works differently. The excise duty on identical goods in India is linked to this CVD. This form of charge is covered under Section 3 of the Customs Tariff Act, not Section 12. The Court stated that customs duties are controlled by independent legislation. The Customs Tariff Act and 19

I. T. MIRROR (2023-24) Customs Act are separate. Both laws tax imports, but they work separately. The Customs Tariff Act can impose a tariff separate from the Customs Act. The Court stated that customs duty can be imposed under several laws, and for extra levies like CVD, the Customs Tariff Act is the key statute to evaluate. The two laws determine import customs duty separately but function together. COURT OBSERVATIONS The concise summary of the court's observations is as follows:- Jurisdiction Issue: The court determined that imposing interest and penalty on a customs duty demand was improper and beyond the legal authority of the authorities. They lacked jurisdiction due to the specific circumstances of the case. Incorrect Section: The court found that a specific section (Section 28AB) of the Customs Act wasn't applicable because there was no determination of duty under Section 28(2). Thus, the Act couldn't be used to impose interest and penalties. Authority Limitation: The court rejected a respondent's argument that they could decide settlement terms, including interest and penalty. This claim exceeded the authority granted by the Customs Act. Misused Law Reference: The court addressed the mistaken reliance on Section 127C of the Customs Act to impose interest. It clarified that Settlement Commission orders must align with Customs Act provisions, without exceeding them. No Valid Reason for Interest: The court emphasized that merely gaining financially from incorrect duty rates wasn't enough reason to demand interest. Without clear legal provisions, benefiting financially didn't warrant interest payment. Interest and Penalty Invalidated: Consequently, the court declared the Commission's decision to impose interest and penalty null. The petitioner wasn't obliged to pay the interest and penalty amounts. Refund and Bank Guarantee: The court directed authorities to refund the penalty the petitioner paid, along with any applicable interest. Additionally, any provided bank guarantees were to be cancelled and returned. In essence, the court decided that the authorities lacked proper legal grounds to impose interest and penalty. They found that certain sections of the Customs Act were misinterpreted, leading to an unjust demand. The court quashed the interest and penalty, ordered the refund of the penalty, and instructed the return of the provided bank guarantees. CONCLUSION The Settlement Commission cannot charge interest when there is no law backing that interest charged. This limitation occurs when an importer profited from underpaying duty. Settlement Commission orders cannot be selectively accepted or rejected. If the Commission's order violates the law, the courts should intervene. Section 90(1) of the Finance Act, 2000, and Sections 3(1) and 3A(1) of the Customs Tariff Act, 1975, control CVD, SAD, and surcharge rates. These sections supersede the 1962 Customs Act Section 12. Importantly, surcharge, CVD, and SAD interest and penalties are not explicitly stated. Penalties without legal foundation are illegal. The 1962 Customs Act's assessment, collection, and enforcement methods cannot be used for 1975 Customs Tariff Act fines and interest. Penalties as extra taxes must be backed by clear and explicit legislative authority under the Constitution. The application of fines and interest is substantive, not procedural. When particular legislative requirements are lacking, duty collection procedures cannot recover penalties and interest for delayed tax payments. Penalties, which are supplemental taxes, must be set by legislation. 20

I. T. MIRROR (2023-24) Many employers resort this practice of paying the value of leave and bonus along with the pay / salary of the respective month. There are two purposes behind this practices. One, the monthly take home pay escalates and second, the employers think that it is easy in accounting. Sometimes it is resorted in the case of casual workers employed either directly or through contractors because of casualness in their services. Many of such workers may not be available when they attain the eligibility for these benefits under the respective law. The objective of this article to assess its legality, justification and risks involved. 1. BONUS a. Legality – i. The PBA is a self-contained code underlinking the bonus is profit sharing mechanism with minimum and maximum ceilings. Its sections 4, 5, 6, 7, 10 and 11 provide detailed procedure for computation. Attention is drawn specially to section 11 which reads as under: “11. Payment of maximum bonus. — (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent. of such salary or wage.” ii. Presuming that bonus at the end of year will be only @ 8.33% has no legal base, as the whole process starts with gross profit shown in the loss and profit account of the establishment. Thus bonus may go up to 20%. Even if the employer pays every month @20%, then also it does not meet the requirement of law, bonus more than the exact percentage computed under provisions of the law is crime under section 10 and 11 of the Act and punishable with three months imprisonment or fine which may extend to Rs. 1,000/- or with both under section 28 of the Act. iii. Unless balance sheet has been finalized, bonus cannot be computed, hence question of payment does not arise. b. Justification: i. Normally some employers give the reason for payment of bonus every month that casual workers come and go and they may not be available at the time of bonus payment. This reason in the backdrop of payment of wages through bank accounts, does not bear any substance. Bank accounts are always available to make such payment. ii. Bonus is yearly payment, by concept and practice. Employees wait for it for the whole year. Super majority of employers pay it on yearly basis especially during the period of festivals. If an employee does get this yearly payment, he feels deprived and frustrated. Monthly Payment of Bonus and Leave : Legality, Justification and Risks - PRAMOD KUMAR JADIA 21

I. T. MIRROR (2023-24) iii. Some employer gives the reason that monthly payment of bonus and leave helps them get required manpower as it inflates their monthly take home. This reason is also base less, as in this situation monthly payment gives the feel of wages. In fact, if inflation of monthly take home is an objective, than this bonus is mere re-naming of the wages. c. Risks: i. It may be considered as wages in the disguise of bonus and may attract the provident fund, again annual bonus considering this bonus as bogus bonus. ii. It may be considered as fraud and punishable under the Indian Penal Code. 2. LEAVE: a. Legality: i. It is admissible under the Factories Act, 1948 under its section 79 and 80. ii. It is admissible @ 1 day for each set of 20 days working. iii. There is qualifying attendance to be eligible, that is, 240 days working in the preceding calander year. iv. Thus, one becomes eligble for computation of leave only in the month of Jan every year. v. Factories Act does not say about its encashment. It only says to carry forward of unconsumed leave to next calendar year with a ceiling of 30 days. b. Justification: i. Leave is given so that employee may accomplish his personal work without loss of wages. The practice of making payment of leave month on month kills the basic idea. ii. On separation, the unused leave is encashed at the prevailing rate of wages. Making monthly payment, finishes the practice of carrying forward to the zero. Result is that employee when leaves the employment he goes with dry pocket. He carries only gratuity and feels cheated as after putting his valuable years, he is going dry pocket. Hence, carry forwarding the unused leave should be motivated as these are nothing but the savings. iii. Even, if workers have the trend of ayaram-gayaram, still the leave credit, whatever it is gives them a positive thought about the establishment. iv. Leave on consumption basis helps them to ripe the benefits of bonus and provident fund. In month-onmonth system they are deprived of these benefits. c. Risk: i. The month-on-month payment without computation of entitlement may construe as monthly wages and may attract provident fund and bonus on such encashment also. ii. It may be considered as fraudulent activity and may result in punishment under the Indian Penal Code and the Factories Act 1948. In the backdrop of the information provided in this article it is recommended to keep away the practices of paying both the benefits along with the pay / salary of the month. 22

I. T. MIRROR (2023-24) IT SECTOR IN INDIA: Indian IT/ITeS Sector is steering India's leadership position in the global landscape in terms of employment and economic value creation. The IT industry accounted for 8 per cent of India's GDP in 2020. Indian IT industry is expected to contribute 10 per cent to the country's GDP by 2025. IT SECTOR IN GUJARAT: Having state-of-the-art infrastructure, 6% national geographical area, 5% of national population, 8% of national GDP share, Gujarat topped the index with a strong display in export and excelled in Ease of Doing Business and also been recognized nationally and globally for offering a conductive business ecosystem. Thus Gujarat has a huge potential for increasing the share of exports in the IT sector. FOCUS: Attracting investments and generating employment in IT/ITeS Sector across Gujarat VISION: To transform the IT landscape of Gujarat by becoming one of the leading states in terms of world-class IT infrastructure, availability of high-skilled resources and innovation in Emerging Technologies. IMPORTANT DEFINITIONS: 'IT software': means any representation of instruction, data, sound and image, including source code and object code recorded in a machine readable form and capable of being manipulated or providing interactivity to use through automatic data processing machines. 'IT enabled Services (ITeS)' are construed as any service, which results from the use of any IT software over a system of IT products for realizing the value addition service rendering through the application of IT and shall include the following: 1. Call centers 2. Medical transcriptions 3. Back office operation/Business Process Outsourcing (BPO) 4. Knowledge Process Outsourcing (KPO) 5. Revenue accounting and other ancillary operations 6. Insurance claim processing 7. Web/digital content development/ERP/software and application development Incentives available in Gujarat for IT / ITeS Service Sector - CS MUKESH PAMNANI Operative Period of Policy: 07/02/2022 to 31/03/2027 23

I. T. MIRROR (2023-24) 8. Financial and accounting processing 9. HR and payroll processing 10. Bioinformatics 11. IT-enabled banking 12. Non-banking services, including insurance, pension, asset management and market related services 13. Depository, security registration and dematerialization services 14. GIS-enabled services 15. IT support centers 16. Website services 17. Emerging Technologies, such as Cyber Security, Big Data, Artificial Intelligence, Blockchain, Machine Learning, etc. New Unit: Unit which commences its commercial operation during the operative period of the policy in Gujarat. (2022-2027). Existing Unit: Means already running its operations within the state and is undertaking expansion in the project for carrying out activities indicated in the Policy and begins work for such expansion during the operative period of the Policy. Expansion Unit: An existing unit in Gujarat undertaking expansion such that the total headcount of employees on its payroll, increases by 50 per cent of the existing headcount or by 1,000 employees, whichever is less during the operative period of the Policy. Gross Fixed Capital Investment(GFCI): Investment in building, computers, software, networking related hardware and other related fixed assets, excluding the cost of land and expenditure on purchase of the building required to produce products or services by the eligible unit. Eligible Unit: New unit having a minimum of 10 employees on its payroll or an expansion unit having a minimum of 15 employees on its payroll after expansion. Eligible CAPEX expenditure: Capital expenditure as per GFCI. a. GFCI made during the operative period of the Policy and up till 2 years after the date of commencement of commercial operations shall be considered under eligible CAPEX expenditure. b. Stamp Duty and Registration Fees paid to the Government for lease/sale/transfer ofland and office space. c. Renewable energy expenditure — Expenditure incurred on the purchase ofequipment for setting up of captive renewable energy plant. Eligible OPEX expenditure: A. Lease rental expenditure: For a period of 5 years from the date of start of commercial operations or in-principle approval, whichever is less, up to a maximum monthly rental of INR 50/sq. ft. of built-up area or actual lease rental expenditure, whichever is lower. B. Bandwidth expenditure: Actual expenditure incurred on subscribing or leasing bandwidth from the licensed Internet service provider with a valid GST number. 24

I. T. MIRROR (2023-24) C. Cloud rental expenditure: Actual expenditure incurred on cloud rental by either subscribing or leasing from a cloud service provider, provided that the service providing company is registered in India and has a valid GST number. D. Power tariff expenditure: Actual expenditure incurred on energy units consumed by the IT/ITeS units. E. Patent expenditure: Expenditure incurred on the application of every successful patent during the operative period of the Policy up to INR 5 lakhs per patent. (maximum of 10 patents per year for five years allowed) Base Employee Count: means the average employee count of the preceding 12 months from the month of declaration of expansion. Eligible Employee Count: For New unit: A minimum 10 employees on its payroll. For Existing Unit going under expansion: A minimum 50% additional employee on payroll above 'Base Employee Count' or increase of employee count by 1,000 employees, whichever is lower. Month of Eligibility means, A. The month when a Unit achieves an 'Eligible Employee Count' or starts commercialoperation, whichever is later in case of IT/ITeS Units. B. The month when Occupancy Certificate / Building Use (BU) permission for IT Office spaceis obtained / Project Completion Certificate is obtained in case of IT City/IT Township. C. The month when an entity starts commercial operation in the case of Data Centers and Cable Landing Station (CLS). INCENTIVES: CAPEX-OPEX MODEL: Investment Category Category I — GFCI less than INR 250 Cr. Category ll (MegaProjects) — GFCl more than or equal to INR 250 Cr. or project generating more than or equal to 2,000 direct IT employment on its payroll Available Financial Incentives CAPEX Support: one-time CAPEX support of up to 25 % of the eligible CAPEX, subject to a maximum ceiling of INR 50 Cr.The disbursement will be done in 20 equal quarterly installments. OPEX Support: Upto 15 % of the annual eligible OPEX expenditure, subject to a maximum ceiling of INR 20 Cr. per year for a period of five years. The disbursement will be done in quarterly installments. CAPEX Support: one-time CAPEX support of up to 25 % of the eligible CAPEX expenditure, subject to a maximum ceiling of INR 200 Cr.The disbursement will be done in 20 equal quarterly installments. 25

I. T. MIRROR (2023-24) OPEX Support: Uup to 15 % of the annual eligible OPEX expenditure, subject to a maximum ceiling of INR 40 Cr. per year for a period of five years. The disbursement will be done in quarterly installments. SPECIAL INCENTIVES FOR IT/ITES UNITS: Investment Category Employment Generation Incentive (EGI) Available Financial Incentives one-time support for every new and unique job created in the State. It is applicable for new local employees hired and retained for a minimum period of one year at 50 percent of one month's CTC up to INR 50,000 per male andINR 60,000 per female employee. Interest Assistance 7% on term loan or the actual interest paid, whichever is lower with a ceiling of INR1 Cr. per annum. Atmanirbhar Gujarat Rojgar Sahay (AGRS) reimbursement on the employer's statutory contribution under Employees' Provident Fund (EPF) made by them for their employees working in the offices situated within Gujarat for a period of five years. 100% for female employees and 75% for male employees with ceiling of 12% of basic salary +DA + retaining allowance . Electricity Duty Incentive (EDI) Can claim entire ED paid for period of 5 years from commencement of operations. APPLICATION MODE: Online Procedure from start to end: Application In-Principle Approval Claims Submission Final Approval Disbursement APPLICATION FOR INCENTIVE CLAIM: All Eligible New Units must submit their incentive application within one year from the month of start of commercial operations. Furthermore, all Eligible Expansion Units must submit their incentive application within one year from the month of achievement of eligible employee count. TERMS & CONDITIONS: 1. An existing unit outside Gujarat State carrying out new investment in the IT/ITeS industry at any location in Gujarat and commences commercial operation during the operative period of the Policy shall be considered as a new unit. 26

I. T. MIRROR (2023-24) 2. A new unit shall be eligible for assistance for maximum one-time expansion during the operative period of the Policy. 3. It shall be applicable for incentives only one time during the operative period of the Policy as an Expansion. 4. To be eligible for incentives going under expansion, the new investment made for the expansion must be brought into commercial operations during the operative period of the Policy. 5. These are the benefits other than Government of India offers. 6. EGI: The EGI assistance is tied to each individual IT employee and can only be claimed once for each individual IT employee in their lifetime. 7. Work from Home: AGRS and EGI available for employees operate from within Gujarat. 8. If the 'Employee on Payroll' count falls below 10 for 3 consecutive months, all further financial assistance will be discontinued for the Eligible New Unit. 9. If the 'Employee on Payroll' count falls below 'eligible employee count' for three consecutive months, all further fiscal assistance will be discontinued for the Eligible Expansion Unit. 10. An Eligible New Unit which is availing fiscal incentive assistance under this Policy can apply for expansion only after two years from the date of commencement of operation of the Eligible New Unit. 11. FOR CAPEX: i. Only domestic invoices with valid GSTIN (in case the invoices do not specify GSTIN, then an additional CA certified certificate mentioning the vendor and its GSTIN registration should be attached with the invoices) & International Invoices attached with the appropriate Bill of Entry will be eligible for claims under GFCI, provided the date of the invoice is within the eligibility period of the unit. ii. All the invoices claimed shall be in the same name as that of the entity/company registered with the Portal. iii. Purchase Order/Delivery Challan will not be admissible for computation of Eligible CAPEX iv. Expenditure. v. The invoices must be paid from the bank account registered in the name of the Eligible Unit. vi. Only the base invoice amount (excluding tax) will be considered while computing the eligible amount under Eligible CAPEX Expenditure. vii. Only new purchases will be considered eligible for computation of Eligible CAPEX Expenditure incurred on the purchase of old/refurbished/secondhand items will not be considered. viii. Any expenditure incurred on repairing/refurbishment of any equipment/machinery will not be considered for computation. ix. In the case of expansion, the expenditure made before the month of declaration of expansion will not be considered for determining the Eligible CAPEX Expenditure x. In case of an existing unit outside Gujarat State carrying out new investment in the IT/ITeS industry at any location in Gujarat, only the invoices of expenditure incurred in Gujarat State will be considered eligible for computation of Eligible CAPEX Exp enditure, i.e., all the invoices must be in the name of the Eligible Unit with its billing address or shipping/delivery address as the address of the location of the upcoming Eligible Unit as mentioned in the Incentive Management Portal. 27

I. T. MIRROR (2023-24) xi. In case of Renewable Energy Expenditure, only expenditure incurred on the purchase of equipment for setting up of a captive renewable energy plant @25% of the cost of equipment up to INR 5 Cr. will be considered eligible for claim under Eligible CAPEX Expenditure. FOR OPEX: I. The Lease Rental Expenditure head only covers the base lease rent and does not include any other adhoc services offered by the lessor. Furthermore, the expenditure incurred towards lease rental shall be computed for a maximum of 60 sq. ft. of built-up area per employee on the payroll of the eligible IT/ITeS unit. II. Only expenses incurred towards patent application fees and hiring of legal services will be eligible for claim under this expenditure. It may kindly be noted that only invoices billed to India based Legal firms/entities/freelancers are eligible for claim under this expenditure head. INTEREST ASSISTANCE: I. Unit shall have to bear a minimum 2% interest II. Not available for penal interest or any other bank charges III. In case of reimbursement, it shall be made within 2 years from the date of commencement of commercial operation in case of New Unit and 1 year from the month of declaration of expansion in case of Expansion Unit. IV. The loan shall be availed from the Indian branch of the Indian financial institution and the interest repayment period should begin during the operative period of the Policy. V. Such IT/ITeS units shall be able to claim this incentive on an annual basis for a maximum period of five years from the date of start of actual interest repayment EGI Assistance: The EGI assistance shall be applicable for the following cases: I. The individual is working outside Gujarat and is recruited by a Gujarat based IT/ITeS unit, i.e. First IT/ITeS job in Gujarat in case of an existing IT/ITeS employee II. The individual working inside Gujarat and is recruited for the first time in IT/ITeS sector by any eligible Gujarat based IT/ITeS Unit III. The individual is fresh graduate and is hired by an eligible IT/ITeS Unit against a new employment position Replacement hiring, i.e., hiring of resources to fill existing vacancies created as a result of attrition will not be considered eligible for claim under EGI In any event, only the local employee having valid domicile certificate of Gujarat shall be eligible for assistance under the EGI claim. SOURCE: IT/ITeS Policy, Notified by the Government of Gujarat, Department of Science and Technology G.R. No: ITP/10/2021/583612/IT, Sachivalaya, Gandhinagar, Date: 07.02.2022 28

I. T. MIRROR (2023-24) Understanding RERA through Questions and Answers INTRODUCTION Q. What is RERA and what is its purpose? A. The Real Estate (Regulation and Development) Act, 2016 (RERA) is a centralized authority established by the Indian government to regulate and streamline the real estate sector. Its primary purpose is to protect the interests of both builders and buyers, ensuring transparency, timely completion, and quality construction. PROMOTER'S OBLIGATIONS AND DUTIES UNDER RERA Q. What obligations and duties are imposed on promoters under RERA? A. RERA outlines several obligations and duties for promoters, aimed at promoting transparency, fairness, and accountability in the real estate sector. Q. What are the disclosure obligations of a promoter under RERA? A. Promoters are required to provide accurate and complete information about the project, such as project plans, layout, timelines, approvals, and financial details. This ensures transparency for prospective buyers. Q. What are the obligations regarding registration of a project under RERA? A. Promoters must register their projects with the relevant regulatory authority before advertising, marketing, or selling any units. Failure to do so may result in penalties and can lead to legal consequences. Q. What are the responsibilities of a promoter towards the title and use of land under RERA? A. Promoters must ensure that the land on which the project is being developed has a clear title. They are also responsible for obtaining necessary approvals, adhering to land use regulations, and addressing any legal disputes pertaining to the land. Q. What are the obligations to rectify structural defects and provide amenities under RERA? A. Promoters are obliged to rectify any structural defects or deficiencies in the project within a specified time frame. They are also responsible for providing essential facilities and amenities as promised during the sale. Q. What are the obligations related to maintaining separate project accounts under RERA? A. Promoters must maintain separate bank accounts for each project and deposit 70% of the funds collected from buyers into this account. This ensures that funds are not diverted and allows transparency in financial transactions. HOW RERA BENEFITS BUILDERS Q. How does RERA improve the transparency of real estate business? A. RERA ensures that builders register their projects with the regulatory authority, providing complete disclosure on project details, timeline, and financial aspects. This promotes transparency for buyers in making informed decisions. CA HARSH MEHTA ADV (CS) LOKESH SHAH 29

I. T. MIRROR (2023-24) Q. What changes were made to RERA for project registration, approvals, and disclosures? A. RERA mandates builders to register their projects, obtain necessary approvals before launch, and disclose project-related information on the RERA website, including project plans, layout, cost of construction, etc. Q. How does RERA regulate project delivery and guarantee timely completion? A. RERA requires builders to adhere to declared project timelines and specifies penalties for delays. If timelines are not met, buyers have the right to receive compensation and even terminate the agreement if necessary. Q. What penalties does RERA impose on builders who violate rules and regulations? A. RERA imposes heavy penalties, including imprisonment, for builders who fail to register their projects, violate disclosure norms, or engage in unfair practices. This promotes accountability and discourages fraudulent activities. HOW RERA BENEFITS BUYERS Q. What were the major issues faced by buyers before RERA? A. Buyers often faced challenges such as project delays, diversion of funds, and lack of transparency in pricing and project specifications. These issues compromised the trust and financial security of buyers. Q. How does RERA address the issue of project delays and cancellations? A. RERA holds builders accountable for completing projects within the specified timeframe. If there are any delays, buyers are entitled to receive compensation and even withdraw from the project if necessary. Q. How does RERA promote transparency in real estate prices? A. RERA mandates builders to disclose the project cost, including the cost of land, construction, and other charges. This eliminates price manipulation and ensures fair pricing for buyers. Q. What are the provisions for building defects and quality of construction? A. RERA requires builders to provide quality construction and addresses issues related to structural defects and inadequate amenities. Builders are responsible for rectifying any such defects within a specified time frame. Q. What are the provisions for disputes between buyers and builders, and how does RERA resolve them? A. RERA establishes Real Estate Regulatory Authorities (RERAs) in each state to handle disputes between buyers and builders. RERAs provide an efficient dispute resolution mechanism, ensuring fair treatment for aggrieved buyers. GRIEVANCE REDRESSAL MECHANISM UNDER RERA Q. How does RERA address grievances of buyers and builders? A. One of the most significant provisions under RERA is its grievance redressal mechanism, aimed at addressing disputes and grievances of buyers and builders fairly and efficiently. Q. What are the different options available to buyers and builders under RERA? A. RERA provides multiple options for grievance redressal, depending on the nature and severity of complaints. These include seeking resolution through the regulatory authorities, filing cases in appellate tribunals, and approaching consumer courts. 30

I. T. MIRROR (2023-24) Q. How does RERAexpedite the grievance resolution process? A. With RERA's streamlined grievance redressal mechanism, disputes are resolved efficiently, reducing the time taken to settle cases. Additionally, RERA introduces online grievance filing and tracking systems, making the process more transparent, convenient, and accessible. Q. How can builders and buyers approach RERAfor grievance resolution? A. Builders and buyers can file grievances online through the RERA website or in person at the regulatory authority's office. Builders must respond to complaints within 30 days, and the regulatory authority must dispose of complaints within 60 days. Q. What are the penalties imposed fornon-compliance with RERA's grievance redressal mechanism? A. RERAmandates heavy penalties for non-compliance with the grievance redressal mechanism, including imprisonment and project cancellation. This ensures adherence to the regulatory norms and promotes fairness and accountability. IMPACT OF RERA ADOPTION ACROSS STATES Q. What are the significant changes noticed in key states afterRERAadoption? A. After RERA adoption, states have witnessed increased transparency, reduced project delays, improved accountability, better quality construction, and increased buyer confidence in the real estate sector. Q. What were the earlier laws and regulations governing Real Estate in India before RERA? A. Before RERA, real estate was governed by state-specific laws, which often lacked uniformity and effectiveness, leading to various issues and challenges for builders and buyers alike. Q. What was the need to have a centralized authority forReal Estate like RERA? A. The decentralized regulatory framework resulted in inconsistencies and complexities. The establishment of RERA provided a uniform regulatory structure across states, ensuring effective implementation of rules and addressing major issues in the real estate sector. RERA: TOWARDS SUSTAINABLE DEVELOPMENT Q. How does RERAcontribute to sustainable development in the real estate sector? A. RERAencourages environmentally friendly practices by promoting the use of renewable energy sources, rainwater harvesting, waste management systems, and the construction of eco-friendly buildings. This ensures sustainable development in the long run. Q. What are the penalties fornon-compliance with sustainability norms underRERA? A. Builders who fail to comply with the sustainability norms mandated by RERA may face penalties, including fines and cancellation of project registration. This reinforces the importance of sustainable practices in real estate. RERA: EMPOWERING BUYERS WITH ONLINE SYSTEMS Q. How has RERAimplemented online systems to facilitate buyer-builder interactions? A. RERA has introduced online platforms where buyers can access project-related information, file complaints, and track the progress of their cases. These systems have made the process more convenient and transparent for buyers. Q. How do these online systems benefit the real estate sector? A. The online systems introduced by RERA streamline the entire process, minimize paperwork, reduce the scope for fraudulent activities, and expedite grievance redressal. This increases efficiency and trust in the real estate sector. 31

I. T. MIRROR (2023-24) PENALTIES PRESCRIBED UNDER RERA Q. What penalties are prescribed underRERAfornon-compliance with its provisions? A. RERA imposes penalties on builders and developers who fail to comply with its provisions. These penalties aim to discourage fraudulent practices and ensure accountability in the real estate sector. Q. What are the penalties fornon-registration of a project underRERA? A. If a builder fails to register a project under RERA, they may face a penalty of up to 10% of the project cost. Additionally, imprisonment for a term that may extend up to 3 years can be imposed. Q. What penalties can be imposed for violations related to project advertisement and disclosure? A. Builders who provide false information in advertisements or fail to disclose essential project details may face penalties of up to 5% of the project cost. In some cases, imprisonment for a term that may extend up to 1 year can be imposed. Q. Are there penalties forproject delays underRERA? A. Yes, RERA mandates penalties for project delays. Builders who fail to complete projects within the specified timeline may have to pay compensation to buyers. If the builder continues to delay the project, they may face imprisonment for a term that may extend up to 3 years. Q. What penalties can be imposed for other violations underRERA? A. RERA also prescribes penalties for various violations, such as non-compliance with quality standards, diversion of funds, and non-adherence to sustainability norms. Depending on the severity of the violation, penalties can range from fines to imprisonment. CONCLUSION RERA has emerged as a game-changer in the real estate sector, bridging the gap between builders and buyers. It has enhanced transparency, accountability, and trust in the industry while promoting timely completion and quality construction. With RERA in place, builders and buyers can confidently participate in the real estate market, fostering a healthier and more prosperous environment for all stakeholders involved. 32

This article aims to deliver Beginners Guide in relation to the Outsourcing & Offshoring services in India. Asking the right questions is the key to learning and so we have covered the guide in form of few basic questions and answer format. 1. Why & What is Outsource / Offshore? - Outsource is a process of transferring some of the non-core less value adding Manufacturing or Services processes to a third-party vendor. - Offshoring is the relocation of a business process from one premises/region/country to another. - The basic philosophy being: To move transactional activities to the experts in order to give an organization the capacity to focus on its expertise. 2. Location of Outsourcer / Offshoring: - The location may be located inside premises of Outsourcer, or in nearby location, different state/region or country. 3. What is difference between outsourcing and offshoring? - Offshoring means getting work done by an external organization. Offshoring involves setting up of new facility by same Organisation in different location normally a place with better natural resources or skilled/cheaper human resources. 4. Benefit / Reason for Offshoring / Outsourcing - In Offshoring the benefits would be sustained efficiencies & stability of supply of basic Natural & Human resources without any compromise of control, intellectual property rights,value and culture. - In Outsourcing the benefits would be same except danger of dependence on another organisation and hence compromise of control, intellectual property rights, value and different culture. But Outsourcing entails lower initial investment and commitments and setup effort and time that Offshoring requires. Hence Medium to Big organisation go for Offshoring which Smaller entities can reap benefits by outsourcing. 5. What activities can be outsourced/ offshored? - Products that can be outsourced/offshore/ed:Multinational and Mid-sized companies have outsourced/offshored almost all products in various field like petrochemical, plastics, engineering, medicine etc - Services that can be outsourced: Let uslook at how to start outsourcing business tasks, including some options you may not have considered. i. Administrative tasks & hiring — Recruitment, Form filing, Data sorting etc ii. Research tasks — Content, Graphic, Software, Hardware, Biotech etc What are Outsourcing & Offshoring Services in India - CA FARHAD G. WADIA 33

iii. Bookkeeping, taxes and accounting tasks — Accounting, Tax Preparation,Accounts Payable & Receivables, Data Analysis & Charting. iv. Design and imagery tasks — Graphic design, Photograph editing, Videography etc v. Sales tasks — Developing Sales Plan, Deliverables, KPI tracking etc vi. Marketing tasks — Developing Sales Collaterals, Social Media promotion and Physical Media promotion. vii. Some common outsourcing activities include 1. Human resource management, 2. Facilities management 3. Supply chain management 4. Accounting 5. Customer support and service 6. Computer aided design 7. Research& development 8. Engineering 9. Diagnostic services 10. Legal documentation 6. How to find Clients, Partners in Foreign Countries? a. Who outsources? Typical Sources of outsourced work st i. 1 Opportunity: Friends who have moved abroad and who have gone into business they will take a call based on friendship, trust, and confidence in Indian Resident counterpart. Here the billing will be just to maintain cost and salary return to Indian counterpart. nd ii. 2 Opportunity: st Depending on the area of your 1 assignment say Motel business Accounting (New Jersey based) you can pitch for succeeding assignment and with testimonial/referrals. Other Motel business in the vicinity (New Jersey, Philadelphia) as well asRelatives and their connects in Motel industry. iii. Succeeding Opportunities come from 1. Work outsourcing sites like Guru.com, Fiverr.com, Freelancer.com, upwork.com 2. Conversion of Contacts and Networks of Social Promotion efforts like a. Linkedin b. Facebook c. Google AdWords d. YouTube e. Blog f. Podcast I. T. MIRROR (2023-24) 34

I. T. MIRROR (2023-24) 3. Agents in respective country Outsourcing work a. Certain industries in US have now developed middlemen i. Recruitment industry ii. Infotech iii. Accounting iv. Telecom 4. Trade Fairs a. Most Trade Fairs give particularly good opportunity to participants, but the key is to know who your target is. 5. Trade Association a. Trade association are basically leaders of industry of that region and business so if one becomes a st member then they are the 1 prospects. nd b. Connects of these international local chambers of commerce are the 2 prospects. 7. Cost of New Clients Acquisition (from above methods) st a. 1 Opportunity:NIL except few phone calls or Whatsapp nd b. 2 OpportunityNIL (At this stage you need Service Brochures prepared by yourself or professionally.) c. Other Motel business in the vicinity -NIL d. Relatives and their connects in similar industry- NIL e. Succeeding Opportunities of outsourcing cost are between $50-100 per year for i. Work outsourcing sites like a. www.Guru.com, b. www.Fiverr.com, c. www.upwork.com d. https://www.truelancer.com/ e. https://www.freelancer.in/ f. https://www.crowdspring.com/ g. https://www.peopleperhour.com/ h. https://expert360.com/ ii. Conversion of Contacts from Social Promotion efforts like a. LinkedIn ($325 to $400 per year options) b. Facebook ($100 - $ 500 monthly spend on add) c. Google AdWords ($100 - $ 500 monthly spend on add) d. YouTube ($0 - $ 500 monthly spend on add) e. Blog - Nil f. Podcast–Nil iii. Agents in respective country Outsourcing work a. $ 60000 per year minimum or revenue sharing of 10%-20% and combination of both. iv. Trade Fairs Atleast, $4000 per fair but there is subsidy from Government for this. 35

v. Trade Association vi. $ 5000 per trade association 8. Preparing office infrastructure Office Space: i. Developed countries have floor space per staff of 50 sq feet but in developing countries it goes down to 25 sq feet. This is because there are fewer car parking, recreational and common amenities mandated. Further the sense and requirement of personal space in populated Asian countries is very low. Rent cost in Indian Cities: A Grade can be Rs 100-250/ sq feet, but can be Rs 35-70 in C Grade. ii. Standard BPO/KPO deskconsist of space is just enough space for a. 2 screens (3 screens in some cases) b. Thin client c. IP phone. d. 5-6 power plugs with 10-16 Amps circuit breaker. 2 power plugs for Monitors, 1 for Thin Client, 1 for IP phone, 1/2 Free plug (with American and US Sockets) which can be used for other Audio/visual support. e. In most cases a desktop is not needed as most use Centralised cloud servers of client and so need no processing power of desktop computers and thin client technology is in vogue. This also lends to better security. f. 3-4 nos - RJ45 jacks (1 for PC/Thin Client, 2 for redundancy) connected by CAT 6 cabling and/or access using 1000 MBPS switches dedicated to 2 to 4 User desks. g. Soft but adequate desk lighting h. Personal Foot drawers may also be considered but generally they yield to cluttering with rough work and security risk. Desktop and Desk-Table Cost in Indian Cities: o Screen cost Rs 6500-12000/ screen, o Thin client Rs 9000-18000, o Desk prefab Rs 15000-25000 per unit with electricals but even a stylish Wood and Wrought iron Frame table can be Rs 5000-Rs7000. General Networking Cost: Minimum Rs 90000 + Internet cost. iii. Security Aspects: 1. Adequate lighting in Parking, 2. Pick/Drop facilities for night shift staff, 3. Sexual Harassment in Workplace policy and training 4. Video with Audio recording and proper remote back up. iv. Other Physical Spaces: 1. Adequate toilets, garbage disposal, sanitation, recreational area, and Canteen space. 2. Reception area should be isolated from workspace and should have standees for Magazines, marketing info., sofa, refreshment for visitors. I. T. MIRROR (2023-24) 36

I. T. MIRROR (2023-24) b. Basic Documents i. Staff documentation 1. Resume, references, and background check 2. Govt. ID proof, Medical check-up report (Initial and Routine) 3. Non-disclosure agreement 4. Mandatory training for health, secrecy, client relationship/ behaviour andNon-disclosure agreement 5. Process Training docs and checklist like rules, ISO/GDPR/SSAE standard info, Disaster Training, evacuation drill etc ii. Procedure Documentation 1. HR/Personnel manual 2. Outsource/Offshore Etiquette & sensitivity to International sensibilities. 3. Daily Security Entry / Exit Log 4. Daily work assignment sheets and logs 5. Standard SOP and Maintenance records for a. Electrical b. Furniture Fixtures c. Fire Safety d. Housekeeping and Health e. UPS & Battery Back up f. Emergency Exits and Training c. Communicating and Control Tool i. Process Control Tools for delegation and reporting like 1. Todoist 2. Jetpack 3. Flock 4. Monday.com ii. Communication tools 1. Skype/Zoom/ Webex/ Google Meet/ IP phones 2. Mobile apps like Hylyt-Sociorac (to secure sms, whatapp and email to/between staff). d. Pricing methods and Models Various pricing models exist like i. Per Resource ii. Turnkey project iii. Per client of client rate iv. Per Hour rate Thumb rule is Cost of services should not be more than 50% of revenue (excluding Managerial staff and profit). However, this may be till 75% for new processes and clients. Unlike domestic servicing there is a high client acquisition cost, software licencing cost, international standards compliance cost. 37

e. Resolving issues i. Delivery issues in Services are easiest if confronted and admitted at first instance. Most of the genuine issues can be resolved. ii. Cultural differences, Geographical distances and Financial arrangements cost unwarranted issues which need to be resolved at a very impersonal but delicate manner. 9. Other essentials of outsourcing business? a. Learn the basics of foreign countries accounting and legal setup. b. Understand the setup of the revenue authority of city, state, Federal and forms for reporting and its periodicity. c. Self learn i. Accounting like QuickBooks, Zoho, Xero ii. Tax software of each county like US – Drake, Turbo Tax, Pro Series iii. Productivity and Control Tools iv. Technology like VPN, Router, Cloud storage, Terminal Server, Internet service protocols, Fire Wall etc. 10. Who Offshores& Who Outsources ? i. Typical Offshore entity are established and large entities looking for a Cost, Time and Quality advantage in another geographical location. ii. Typical Offshore entities size range small to established entities also looking for a Cost, Time and Quality advantage in another geographical location. However they are also looking for growth through you (outsource provider) so are in a way dependent on outsource provider to develop systems, procedures and methods to deliver the benefits as also free them of their daily chores so as to acquire more business to outsource. 1. Typical Age of outsourcers is between 35 -55 years as a. they are looking to enter a market but need an advantage over the established players b. have about 10-20 years of active business life left c. can understand, adopt, and grow using technology. d. Those who put effort into a systematic approach 2. Typically, Outsourcers have one business but multiple location or multiple business and multiple locations. a. To manage Sales, Pricing, Logistics, Inventory is a major challenge and a centralised data processing rd centre is needed. So it doesn't hurt to have it at 2/3 the cost, 24/7 hour service, better educated and even is situated half the way around the globe. 11. Problems of Offshoring a. Cost-Reduction Expectations The biggest risk with offshore outsourcing has nothing to do with outsourcing - it involves the 38 I. T. MIRROR (2023-24)

expectations the internal organization has about how much the savings from offshore will be. Unfortunately, many executives assume that labour arbitrage will yield savings comparable to person-toperson comparison (for example, a full-time equivalent in India will cost 40 percent less) without regard for the hidden costs and differences in operating models. In reality, most IT organizations save 15 percent to 25 percent during the first year; by the third year, cost savings often reach 35 percent to 40 percent as companies "go up the learning curve" for offshore outsourcing and modify operations to align to an offshore model. b. Data Security/Protection IT organizations evaluating any kind of outsourcing question whether vendors have sufficiently robust security practices and if vendors can meet the security requirements they have internally. While most IT organizations find offshore vendor security practices impressive (often exceeding internal practices), the risk of security breaks or intellectual property protection is inherently raised when working in international business. Privacy concerns must be completely addressed. Although these issues rarely pose major impediments to outsourcing, the requirements must be documented and the methods and integration with vendors defined. c. Process Discipline (CMM) The Capability Maturity Model (CMM) becomes an important measure of a company's readiness to adopt an offshore model. Offshore vendors require a standardized and repeatable model, which is why CMM Level 5 is a common characteristic. It is observed that approximately 70 percent of IT organizations are at CMM Level 1 - creating a gap that is compensated for by additional vendor resources on-sit. Companies lacking internal process model maturity will undermine potential cost savings. d. Loss of Business Knowledge Most IT organizations have business knowledge that resides within the developers of applications. In some cases, this expertise may be a proprietary or competitive advantage. Companies must carefully assess business knowledge and determine if moving it either outside the company or to an offshore location will compromise company practices. e. Vendor Failure to Deliver A common oversight for IT organizations is a contingency plan - what happens if the vendor, all best intentions and contracts aside, simply fails to deliver. Although such failures are exceptions, they do occur, even with the superb quality methodologies of offshore vendors. When considering outsourcing, IT organizations should assess the implications of vendor failure (such as, does failure have significant business performance implications?). High risk or exposure might deter the organization from outsourcing, it might shift the outsourcing strategy (e.g., from a single vendor to multiple vendors), or it might drive the company toward outsourcing (if the vendor has specific skills to reduce risks). The results of risk analysis vary between companies; it is the process of risk analysis that is paramount. f. Scope Creep There is no such thing as a fixed-price contract. All outsourcing contracts contain baselines and assumptions. If the actual work varies from estimates, the client will pay the difference. This simple fact has become a major obstacle for IT organizations that are surprised that the price was not "fixed" or that the vendor expects to be paid for incremental scope changes. Most projects change by 10 percent to 15 percent during the development cycle. 39 I. T. MIRROR (2023-24)

g. Government Oversight/Regulation Utilities, financial services institutions, and healthcare organizations, among others, face various degrees of government oversight. These IT organizations must ensure that the offshore vendor is sensitive to industryspecific requirements and the vendor's ability to: 1) comply with government regulations; and 2) provide sufficient "transparency" showing that it does comply and is thus accountable during audits. The issue of transparency is becoming more significant as requirements such as the USA PATRIOT Act and the Sarbanes-Oxley Act place greater burdens of accountability on all American corporations. h. Culture A representative example: although English is one official language in India, pronunciation and accents can vary tremendously. Many vendors put call-center employees through accent training. In addition, cultural differences include religions, modes of dress, social activities, and even the way a question is answered. Most leading vendors have cultural education programs, but executives should not assume that cultural alignment will be insignificant or trivial. i. Turnover of Key Personnel Rapid growth among outsourcing vendors has created a dynamic labour market, especially in Bangalore, India. Key personnel are usually in demand for new, high-profile projects, or even at risk of being recruited by other offshore vendors. While offshore vendors will often quote overall turnover statistics that appear relatively low, the more important statistic to manage is the turnover of key personnel on an account. Common turnover levels are in the 15 percent to 20 percent range and creating contractual terms around those levels is a reasonable request. Further Recruitment and Retraining cost liability is put upon on the vendor for any personnel that must be replaced. The impact of high turnover has an indirect cost on the IT organization, which must increase time spend on knowledge transfer and training new individuals. j. Knowledge Transfer The time and effort to transfer knowledge to the vendor is a cost rarely accounted for by IT organizations. Indeed, we observe that most IT organizations experience a 20 percent decline in productivity during the first year of an agreement, largely due to time spent transferring both technical and business knowledge to the vendor. Many offshore vendors are deploying video conferencing (avoiding travel) and classroom settings (creating one-to-many transfer) to improve the efficacy of knowledge transfer. In addition, employee turnover often places a burden on the IT organization to provide additional information for new team members. k. Business Impact: Offshore outsourcing can reduce IT expenditures by 15 percent to 25 percent within the first year. Longer term, process improvements often make great impacts on both cost savings and the quality of IT services delivered. Ultimately its all about making a connection, setting up the agreement and service line and exceeding the expected quality of delivery. I. T. MIRROR (2023-24) 40

Glimpses of Outreach Program held on 25/08/2023 with Commissioner of Income Tax (Exemption) and his team

Glimpses of Seminar held on 05/09/2023 on the topic of UNLOCKING GST REFUNDS & EMPOWERING MSMEs & EXPORTERS along with MSME - Development & Facilitation Office, Ahmedabad (Govt. of India) Federation of Indian Export Organisations (FIEO) Exim Club (Association of Exporters & Importers)